The substitution effect causes a consumer to buy less of a product when the price increases because the
A. product is now less expensive compared to similar products
B. product is now more expensive compared to similar products
C. consumer's real income has decreased
D. Consumer's real income has increased
E.. consumer will buy more inferior goods and fewer normal goods
B. product is now more expensive compared to similar products
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The figure above shows a production possibilities frontier. In the figure, when the economy moves from point C to point B, what is the opportunity cost of a DVD?
A) 0.5 cell phones B) 2 cell phones C) 0.5 million cell phones D) 2 million cell phones E) zero
Which of the following correctly lists the products in order from most advertised to least advertised?
a. soft drinks, breakfast cereals, dog food b. corn, dog food, communication satellites c. dog food, communication satellites, corn d. wheat, corn, crude oil
Which of the following economic perspectives focuses on the need for government to shift aggregate supply to correct problems of unemployment and inflation?
A. Monetary. B. Classical. C. Keynesian. D. Supply-side.
Assume that policy makers are pursuing a fixed exchange rate regime. Assume that the economy is initially operating at the natural level (i.e., Y = Yn). Suppose an increase in wealth causes households to increase consumption. This wealth-induced increase in consumption will cause which of the following to occur?
A) The real exchange rate will be permanently higher in the medium run. B) The real exchange rate will be permanently lower in the medium run. C) The effects of this devaluation on the real exchange rate will be ambiguous in the medium run. D) The real exchange rate will be unchanged in the medium run.